Economy becomes focus in South Carolina

January 18, 2008 12:54:29 PM PST

TOM RAUM Associated Press Writer

FLORENCE, S.C. (AP) - January 18, 2008 --

Republican John McCain said Friday his party lost control of federal spending and expressed reservations about President Bush's economic stimulus plan as South Carolina voters got bad economic news on the eve of the GOP presidential primary.

But rival Mike Huckabee told voters Bush is on the right track with a plan to boost the economy.

McCain blamed overspending in part for the nation's economic troubles as voters here received the sobering news that the state unemployment rate had hit 6.6 percent in December, as a result of the largest one-month increase in nearly 20 years.

"As a Republican, I stand before you embarrassed. Embarrassed that we let that spending get out of control, and it led to corruption. Now we have former members of Congress residing in prison," McCain told a town-hall style meeting at the Carolina Hospital East Campus in Florence. "If I'm president, it's going to stop."

"The economy is not good," the Arizona senator said. "The stock market continues down. And the indicators are not good. I'm not too astonished. ... We let spending get totally out of control, and it continues today, and I'm sorry to tell you this."

McCain has voiced apprehension over proposals for temporary tax cuts and more spending as suggested by many Democrats and Republicans, saying they result in additional strains on resources. McCain has instead proposed cuts in corporate taxes from 35 percent to 25 percent, extension of Bush's tax cuts, and elimination of the Alternative Minimum Tax, which was enacted to prevent wealthy taxpayers from using many deductions to avoid federal income taxes.

The number of South Carolina residents without jobs rose nearly 16,000 to 142,800 in December, the state Employment Security Commission reported Friday. The total number of nonfarm jobs fell by 5,900 in December from the month before.

Bush backed a package of about $145 billion worth of tax relief and other incentives Friday to give the economy a "shot in the arm." The president and Congress are scrambling to take action as fears mount that a severe housing slump and painful credit crisis could cause people to close their wallets and businesses to put a lid on hiring, throwing the nation into its first recession since 2001.

The three senators among the top tier presidential candidates - McCain and Democrats Hillary Rodham Clinton and Barack Obama - would be able to votes on any economic plan.

At a rally later in a recreation center in Myrtle Beach, S.C., McCain said he was willing to work with the president and other members of Congress on a stimulus package. "But first, stop the out-of-control spending," he said.

Otherwise, he added, "What's the point?"

Huckabee told voters at a technical college in Greenville, S.C., that Bush's plan is "a good short-term solution."

"But I'm going to tell you, we need some long-term solutions in this country," he said One of his solutions is to replace income taxes and all other federal taxes with a 23 percent national sales tax, with rebates for the poor and working class. Such a system, Huckabee said, would force "drug dealers, illegals, prostitutes, pimps and gamblers - you know, all the relatives you didn't want to come to your house this past Christmas" - to pay taxes.

"Imagine what would happen in this country when everybody is having to do their business on top of the table, instead of underneath the table," the former Arkansas governor said Huckabee noted that his rivals said the national economy was doing well at a debate last year in Dearborn, Mich.

"I think now they realize they didn't get it," he said. "They all talk to a handful of folks at the top and never listen to the people who really make this country work. That's the people who go from paycheck to paycheck and for whom there is no safety net."

An MSNBC-McClatchy Newspapers poll released Thursday of likely Republican primary voters in South Carolina had McCain and Huckabee in a virtual tie at 27 percent to 25 percent, respectively. Former Massachusetts Gov. Mitt Romney, who has been pitching himself to voters as the candidate best able to turnaround the economy because of his successful business career, was third in the poll at 15 percent.

Another poll released Friday by Fox News/Opinion Dynamics gave McCain the lead at 27 percent, followed by Huckabee, 20 percent, and Romney, 15 percent. The poll also found one in five South Carolina Republicans are still undecided. They named the economy as the campaign's top issue, and those who did preferred McCain, according to the poll.

The new South Carolina unemployment numbers are unlikely to have a huge affect the state's Republican primary Saturday because of the short turnaround, said Scott Huffmon, a Winthrop University political scientist.

"Will it change a Huckabee voter over to a Romney voter? Probably not," Huffmon said. But, he said, some undecided voters could choose Romney because of concerns about the economy.